The Planet Of Oakland Logic – The Oakland A’s are aware that they can build a stadium at Howard Terminal without owning the Oakland Coliseum. All they need is the Governor’s approval of the legislation allowing the team to have its own tax increment financing district with the partnership of the Oakland City Council.
Dave Kaval, the President of the Oakland A’s, got the idea to do this from an April 4th 2017 phone conversation with me. At the time, the new A’s leader didn’t know that there was a 2010 Gruen + Gruen Associates Study done for the “Let’s Go Oakland Committee” that forecasted the size of tax increment financing zones using California Redevelopment Law.
Kaval swore up and down that redevelopment was dead, but I told him about SB-628 Bealle, which was signed into law by California Governor Jerry Brown in September of 2015, and allowed for the Oakland City Council to approve the use of tax increment financing for infrastructure development and low-income housing projects. (And to this date, the Oakland City Council has never used it, and undoubtedly is getting bad legal advice, but I digress.)
I then made a spreadsheet including the known costs of the ballpark at the time. The embed file copy of that detailed sheet is below, but to cut to the chase, the original tax increment revenue throw-off was $358 million. But that assumed a total assessed value of $1.4 billion at the time.
Now, here’s where the Oakland A’s private ownership becomes an advantage, and anyone crowing that public money for sports has no economic advantage is just plain talking out of their ass. If the A’s ballpark cost jumps to $1 billion, then the tax increment revenue would increase proportionately to just over $484 million (with about $111 million set aside for affordable housing). Why? Because private building ownership leads to property tax payments that then drive tax increment revenue growth.
(Tax increment financing takes what is called the “base year” assessed value of a City of Oakland predetermined zone of properties, which would be part of Jack London Square and include Howard Terminal, and then each year, subtracts it from the assessed value of that year, and then multiplies that times the tax rate, which yields the revenue for that year, and then that’s done for the total bond period of, in this case, 40-years, until the end year is reached and the bond debt service is paid.)
And that assumes a 40-year TIF bond issue at a conservative and Proposition 13-allowed increase of 2 percent per year. (And, assuming this would be a general obligation bond, we could protect the City of Oakland’s general fund by extending the life of the tax increment financing zone to 15 years beyond the 40-year-time the bond issue has. That would provide additional insurance for the bond issue, and leave Oakland with more money to use to subsidize affordable housing in that area.)
Oakland A’s Naming Rights And Sponsorship Revenues Are Better At Howard Terminal
But the real driver of Oakland A’s ballpark revenue rests in the rich opportunity for giant hauls of sponsorship revenue at Howard Terminal. Using current comparables, namely Oracle Park and Chase Center, it’s my forecast that the A’s could realize $1.2 billion in sponsorship revenue. And that’s well over what could be had at the Oakland Coliseum, and for one main reason: it’s on a highly visible waterfront in a coveted downtown location. In the case of the Golden State Warriors, the organization’s Chase Center sponsorship revenue is said to be $2 billion.
In the case of the Oakland A’s, the spreadsheet shows a total potential revenue of over $4 billion at Howard Terminal. And while the revenue for a Coliseum City Development would be considerable, it’s not going to beat the land values at Jack London Square. That drives tax increment revenue, and revenue from retail and hotel uses in the area, as well.
So, the Oakland A’s can, indeed, let go of the dual land use dream and do the more politically stable Howard Terminal-only ballpark development.
In closing, the spreadsheet is below, and all you have to do is download it to test the numbers, and make your own assumptions. I ask all of the Oakland City Councilmembers to please stop this flying without a net: you all are making wild and crazy assertions based on angels and devils on your shoulders.
And my friend, Oakland City Council President Rebecca Kaplan, must crunch her own numbers and show her own, hand-crafted spreadsheet, first. No spreadsheet, no talking. No saying “You’re wrong” without mathematical proof. (Because I know damn well I’m right.)
No one should take any Oakland A’s Ballpark ideas or plans that come without demonstrated evidence of building a publicly-posted spreadsheet seriously. Enough is enough. We have to get this done, and the best way to do it is for everyone to understand the financial dynamics of the ballpark project.
Also, note that I did not factor in direct revenues from gambling. The Oakland City Council has to get off its collective butt and form a plan to take advantage of the giant revenue potentials that have been opened up by the U.S. Supreme Court.
Stay tuned and LET’S GO, OAKLAND!
Here’s the spreadsheet. If you have questions, just call me at 510-517-7565.Zennie62Media, Inc with CEO Zenophon Abraham. Hire Zennie62Media, Inc to tell your story. We have clients like Insight Terminal Solutions and the Oakland Bulk and Oversized Terminal, with Phil Tagami as co-developer and John Siegel as CEO of ITS. We also helped Maria Ayerdi Kaplan, the creator of the Salesforce Transit Center in San Francisco. Subscribe to Zennie62 YouTube Channel, today!